As Bitcoin drops to its lowest ebb this year, are we looking at a continued bear market


The latest Glassnode weekly report suggests a picture of a potential bear market floor. With an increasingly desperate macro situation, Bitcoin dropped to its lowest ebb since mid-February.

The report is suggestive of a worrying global economic trend of strong headwinds caused by inflation and tightened monetary policies. With compounding uncertainties and risks, this week saw significant weakness across equities, bonds, and cryptocurrency markets.

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With these factors in mind, market profitability has also drastically fallen from around 95% to a lowly 70%. The previous bear runs in 2018-19 and March 2020 saw profitability reduced to a staggering percentage of investors between 45% and 57%.

Source: Glassnode

The Bitcoin market is further affected by the emergence of Short Term Holders (STHs). In the Glassnode report, it was indicated that the STHs have accumulated a huge amount of BTC in the last three months. They are deemed to be the most at-risk cohort of selling due to panic and unrest in the market.

According to the data below, the STH-MVRV oscillator is at -0.75 standard deviations from the mean. This suggests a significant financial pain for the STHs. The on-chain cost basis of STHs is at $46,910, putting the average coin held by an STH at an unrealized loss of -17.9%.

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More severe profitability for STHs is not uncommon but is typically only during the worst sell-offs in bear markets (where the oscillator is below the below blue line).

Source: Glassnode

A glimmer of hope, perhaps?

In a recent Santiment tweet, the grave situation of the current Bitcoin price chart was highlighted albeit with some hope. The Santiment analysts used the ratio to on-chain transactions taken at loss to analyze the chart. As per the metric, Bitcoin is currently undergoing its third-largest market capitulation in over a year. The previous two major blips happened between 19 and 22 January while the second one happened between 16 and 22 February.

Source: Santiment

However, after the major dip in the February windfall, the prices jumped 20% in the space of nine days. This can suggest a huge relief to the Bitcoin community with a renewed sense of hope after a difficult period.




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